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TMI Blog2024 (3) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... chnical Evaluation Report" in respect of work for up-gradation of road from T01 Sira to Shivgali, Package No. JK14-3008, PMGSY-III, Batch No. I of 2022-23, Block Latti, District Udhampur Length-32.150 kms ['the subject work']. A further writ or direction in the nature of mandamus is sought against the official respondents for restraining them from opening the financial bid or to proceed further in pursuance of e-NIT No. CEJ/PMGSY/723 of 2022-23 dated 14.11.2022. Factual matrix: 2. Vide e-NIT issued on 14.11.2022, the official respondents invited bids for various developmental projects across the UT of Jammu and Kashmir which also included the subject work. The petitioner-firm, being eligible in terms of the e-NIT, participated in the tendering process by submitting its bid within the stipulated time. Apart from the petitioner, four other bidders including the respondent No. 5 also participated in the bidding process. As is stipulated in the e-NIT, the bidding process envisaged two stages i.e Part I and Part II and, therefore, the bidders were required to submit technical bid and the financial bid separately. The bidders, who would qualify and are declared 'responsive' during tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mittee in the form of Revised Summary of Technical Evaluation Report dated 24.12.2022, the petitioner is aggrieved of and has challenged the same in the instant petition. The pleadings and submissions of parties: 6. The impugned decision of the Technical Evaluation Committee headed by Chief Engineer, PMGSY, Jammu is assailed by the petitioner primarily on the following grounds: (a) That the decision of the Technical Evaluation Committee and issue of revised summary of technical evaluation report in respect of respondent No. 5 changing its status from 'non-responsive' to 'responsive' bidder is arbitrary, unfair and in violation of the mandatory terms and conditions of e-NIT; (b) That the publication of technical evaluation summary wherein the petitioner was shown responsive along with other bidders and respondent No. 5 was shown 'nonresponsive' had generated legitimate expectation in the petitioner to bag the contract on the basis of lowest rates amongst the bidders quoted by the petitioner; and (c) That the impugned decision of the official respondents overlooks the mandatory condition provided in the SBD at more than one places that the certificate of five years turnove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent No. 5 that bearing of UDIN on the annual turnover certificate for all the five years was not a mandatory condition of contract and, therefore, the decision of the Technical Evaluation Committee taken on 24.12.2022 waiving the directory condition cannot be interfered with by this Court in exercise of its extraordinary writ jurisdiction. It is also argued that in view of huge difference between the bids submitted by the petitioner and respondent No. 5, if the contract is permitted to be allotted to the petitioner, it would cause huge loss to the public exchequer, in that, the official respondents will have to shell out more than 20 lacs above the bid/rates quoted by respondent No. 5. 9. Aside the aforesaid pleadings of the parties, there is a supplementary affidavit filed by the Managing Director of the petitioner-firm taken on record. In the supplementary affidavit, it is highlighted by the petitioner that mentioning of UDIN on the turnover certificate is not an idle formality, but a mandatory requirement. It is submitted that necessity of mandatory submission of certificates by Chartered Accountants with UDIN was felt in the last few years when several cases came up befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... five financial years of the second JV Partner which, in any case, is not the requirement of clause 4.4B(a) III (e). It is pointed out that bid of respondent No. 5 was declared 'responsive' despite the fact that it had not uploaded the annual turnover certificate bearing UDIN issued by the Chartered Accountant for the last five years. The dispute is stated to be pending adjudication in this Court in a separate petition. 12. The supplementary affidavit filed by the petitioner is responded to by the official as well as the private respondent. In reply to the supplementary affidavit, it is submitted that the mandatory requirement of any contract, including the contract in question, is the financial capacity of the bidder to execute the work. This is so clearly laid down in clause 4.6 of the SBD. The bid capacity of the respondent No. 5 in terms of clause 4.6 was worked out on the basis of the annual turnover submitted by respondent No. 5 and it was found that respondent No. 5 had the requisite bid capacity to execute the work and, therefore, was meeting the requirements of SBD substantially. It is on account of this reason, respondent No. 5 was declared 'responsive'. With regard to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITB)(pdf). Without UDIN the certificate will not be entertained and the bid rejected. (b)................................................................... (c) .................................................................. (d).................................................................. (e) .................................................................. (f) Audit reports under Income Tax Act (3CA/3CB along with 3CD reports/(whichever applicable) for the last five financial years. (g).................................................................. ......... (h) The successful bidder will have to provide the original documents (from a to g) duly certified by a Chartered Accountant before a work is allotted to him. Any certificate issued by the Chartered Accountant should mandatorily bear UDIN. 4.3 Joint Ventures: For bids valuing Rs. 10.00 crores and above. (a)..................................................................... (b)..................................................................... (c)..................................................................... (d)........................................................ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 12.2(b) III(h). The bid opening and evaluation is given in clause 22 which requires that the result of evaluation of Part I of the bids (technical bids) shall be made public on e-procurement system following which there shall be a period of five working days for an aggrieved bidder to submit his complaint. This is so provided in clause 22.6 which reads thus: "The result of evaluation of Part I of the bids shall be made public on e-procurement systems following which there shall be a period of five working days during which any bidder may submit complaint which shall be considered for resolution before opening Part II of the bid. for an aggrieved bidder to submit his complaint". Clause 25; Examination of bids and determination of responsiveness: 25.1 During the detailed evaluation of 'Part I of Bids' the Employer will determine whether each Bid; (a) meets the eligibility criteria defined in clauses 3 and 4; (b) has been properly signed; (c) is accompanied by the required securities; and (d) is substantially responsive to the requirements of the bidding documents. During the detailed evaluation of the 'Part II of bids' the responsiveness of the bids will be further determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered Accountants of India with breakup of civil works and total works excluding GST/VAT in each financial year. It further provides unequivocally that, without UDIN, the certificate will not be entertained and the bid rejected. It is, thus, evident that clause 4.2 (III) (a) does not only mandate submission of annual turnover certificate bearing UDIN, but also provides for the consequences of the failure of the bidder to submit such certificate having UDIN of Institute of Chartered Accountants of India on the certificate. Apart from the turnover certificate as stipulated in aforesaid clause, the bidder is also required to submit audit reports under the Income Tax Act for the last five financial year. Clause 4.2 (III)(h) reiterates that successful bidder shall have to provide original documents (from a to g) duly certified by Chartered Accountant before the work is allotted to him, making it further clear that any certificate issued by the Chartered Accountant should mandatorily bear UDIN. This requirement is repeated in clause 4.4 B(a)(III)(a) requiring the bidder to uploaded scanned copies of the requisite documents including annual turnover certificate from the Chartered Accountan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than 200 lacs. The amount put to bid would not include maintenance cost for five years and turnover will be indexed at the rate of 8% per year. 23. Admittedly, in the instant case, the bid amount is more than Rs.200 lacs and, therefore, the bidder was required to show a minimum financial turnover equivalent to 75% of the amount put to bid. He was further required to show that at least 50% of such financial turnover which is equivalent to 75% of the bid amount is from civil engineering construction works. The bidder was also required to show that he had satisfactorily completed, as prime Contractor or sub-contractor, at least one similar work equal in value to one-third of the estimated cost of work of any Government/Semi Government Department (excluding maintenance cost for five years) for which the bid was invited. 24. When we look at the certificate issued by the Chartered Accountant bearing UDIN in addition to five years turnover certificate issued by the Chartered Accountant without UDIN in favour of JV Partner M/S Tarmec Road and Roof Builders, it is evident the document is per se and strictly speaking not a turnover certificate issued by the Chartered Accountant. It is GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he bid. In the face of such stipulation, it is very difficult to accede to the argument of the learned counsel for the official respondents that the stipulation requiring five years annual turnover certificate from the Chartered Accountant bearing UDIN is directory and can be waived off. 26. This brings me to the question as to whether so called year annual financial turnover certificate of respondent No. 5 (tax audit report plus consolidated annual turnover certificate for the last five financial years not bearing UDIN) as was accepted by the official respondents could be termed as 'substantial compliance of the terms and conditions of Part I of the bid document' and, therefore, the decision of the Technical Evaluation Committee is fair and is ought not to be interfered with. 27. Clause 25 of the ITB deals with examination of bids and determination of responsiveness. So far as Part I of the bids is concerned, clause 25.1 clearly provides that the evaluation of the bid shall be done by the employer on the basis of following criteria: (a) the bid meets the eligibility criteria defined in clause 3 and 4; (b) it has been properly signed; (c) it is accompanied by required sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al respondents in reply to the supplementary affidavit filed by the petitioner have clearly admitted that in relation to other works tendered in terms of e-NIT in question, the similar bids of the bidders which were not conforming to the requirement of bearing UDIN on the annual turnover certificate issued by the Chartered Accountant have been rejected. The only reason assigned for deviation in the instant case is that the aforesaid cases were pertaining to different works and that no complaint in terms of clause 26.2 of SBD was filed by the aggrieved bidder(s). Be that as it may, the fact remains that till the impugned decision was taken on the compliant of respondent No. 5, it was also the understanding of the official respondents that submission of five years turnover certified by the Chartered Accountant bearing UDIN of Institute of Chartered Accountants of India was mandatory requirement and breach thereof would entail rejection. It is because of this reason, in the couple of cases, similar bids of the bidders have already been rejected and bidders declared non-responsive. The reasons assigned by the official respondents are totally irrational and clearly smack of arbitrarines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l conditions" and "ancillary conditions" in a contract is aptly brought out by Hon'ble the Supreme Court in para 14, 15 and 16 of Vidharbha Irrigation Development Corporation vs. Anoj Kumar Agarwala and ors, (2020) 17 SCC 577, which is reproduced below:- "14. The law on the subject is well settled. In Bakshi Security and Personnel Services Pvt. Ltd. v. Devkishan Computed Pvt. Ltd. and Ors., (2016) 8 SCC 446, this Court held: "14. The law is settled that an essential condition of a tender has to be strictly complied with. In Poddar Steel Corpn. v. Ganesh Engg. Works [Poddar Steel Corpn. v. Ganesh Engg. Works, (1991) 3 SCC 273] this Court held as under: (SCC p. 276, para 6): "6. ... The requirements in a tender notice can be classified into two categories--those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection III of the bid documents and its connotation in ordinary parlance cannot be overlooked. 15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given." 16. It is clear even on a reading of this judgment that the words used in the tender document cannot be ignored or treated as redundant or superfluous - they must be given meaning and their necessary significance. Given the fact that in the present case, an essential tender condition which had to be strictly complied with was not so complied with, the appellant would have no power to condone lack of such strict compliance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should exercise judicial restraint." 14. Equally noteworthy are the principles set out in para 23 and 24 of the judgment rendered by Hon'ble the Supreme Court in Michigan Rubber (India) Ltd. vs. State of Karnataka, (2012) 8 SCC, 216: "23. From the above decisions, the following principles emerge: (a) the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities; (b) fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by Courts is very limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as the mandatory terms and conditions of ITB are concerned, but is otherwise irrational, arbitrary, unfair and in violation of Article 14 of the Constitution. I am told that the price bids have been opened in which respondent No. 5 has been found to be lowest, whereas, the petitioner is second lowest and the difference between the two bids is substantial. It was also projected before me that even if this Court finds the decision of the official respondents not sustainable in law, yet awarding the contract to the petitioner would be to the serious detriment of public exchequer. 36. Having given thoughtful consideration to this aspect of the matter and keeping in mind the larger public interest in safeguarding public exchequer, this Court though is inclined to allow this petition and quash the decision impugned, yet, will not favour the allotment of contract to the petitioner either. Learned counsel for the petitioner also took exception to the argument of Mr. Sethi learned Senior Counsel appearing for respondent No. 5 that awarding of contract to the petitioner would be to the detriment of public exchequer and submits that that the rates quoted by respondent No. 5 are totally u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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